the United States in its review of our preliminary injunction, and we accordingly take no action with respect thereto.
B. Rate increases on all other goods.
The permanent rate increases approved by the Commission's final report and order in Ex Parte No. 281 are now effective and are being collected on shipments of all goods other than those being shipped for recycling purposes. Although it is conceded that no final environmental impact statement was issued with respect to the Commission's approval of this rate increase, we believe that plaintiff has not satisfied the requirements for a preliminary injunction. The standards for granting preliminary equitable relief are set out in Virginia Petroleum Jobbers Assn v. FPC, 104 U.S. App. D.C. 106, 110, 259 F.2d 921, 925 (1958). Application of these guidelines leads us to conclude that, rather than issue preliminary injunctive relief, we should allow this case to proceed to the merits to determine whether the Commission, in approving permanent rate increases for shipments of goods for purposes other than recycling, undertook major federal action significantly affecting the quality of the human environment which should have been preceded by an environmental impact statement under NEPA.
At the outset, the likelihood of success on the merits is not so obvious as to warrant preliminary equitable relief. Plaintiff alleges that an increase in railroad freight rates causes shippers to divert their cargoes to other, cheaper, modes of transport such as trucks. It is also alleged, and defendants concede, that these other modes cause more pollution and consume more scarce energy resources than rail transport. All parties also agree that historically there has been a trend away from rail transport toward truck transport. Defendants contend, however, that increased freight rates play a minimal role in this diversion, and they present several plausible counter-arguments. According to the railroads, the most significant factor causing shippers to shift from rail to truck transport is service deficiencies. They argue that to bar a rate increase would force the railroads to reduce current operating expenditures such as maintenance of structures and equipment, which would entail further reductions in the quality of service and further diversion to truck transport. A rate increase, according to the railroads, will not hurt but will help the environment by giving the railroads the revenue they need to provide better service. More fundamentally, the railroads draw our attention to the obvious fact that it is in their own self interest to request and implement rate increases only where there is no reasonable prospect of diversion to other means of transport. The railroads have as much interest in minimizing diversion as does plaintiff. We also note that, although EPA and CEQ have both strongly criticized the Commission for not considering the environmental effects of increased freight rates on goods being shipped for recycling purposes, neither agency has challenged the Commission's conclusion that increased rates for other goods will not significantly affect the environment. As we stated in our earlier opinion, "The main purpose of an impact statement is to force assessment of the environmental impact of a proposed action. Therefore, a statement is required whenever the action arguably will have an adverse environmental impact." S.C.R.A.P. v. United States, supra, 346 F. Supp. at 201. (Emphasis in original.) In this case, however, the danger of an adverse impact appears to be sufficiently speculative, at least on the record we now confront, that it would be unsound to grant preliminary relief. Of course, plaintiff will be given full opportunity to demonstrate on the merits that there is indeed a significant adverse environmental impact and that a NEPA statement was required.
Our decision to deny preliminary relief is also influenced by the substantial and irreparable harm to the nation's railroads that such relief would cause. The record indicates that many railroads are in dire financial straits -- some on the verge of bankruptcy -- and badly need the revenues now being obtained under the Commission's rate increase. The increase amounts to some $340 million per year, and were this revenue flow halted it could not easily be recouped should it later appear that no NEPA statement was necessary.
Finally, plaintiff waited until November 7 to attack the legality of a rate increase which was approved on October 4 and went into effect on October 23. It is plaintiff who now seeks to upset the status quo through a preliminary injunction, and it is reasonable that we impose a higher standard for that relief where, as here, the plaintiff had an opportunity to request an injunction to preserve the status quo prior to the time the increase went into effect. The pleadings in this case do not meet this higher standard, and accordingly the motion for a preliminary injunction is denied.